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Second Best Redistributive Policies: The Case of International Trade

Roger Guesnerie ()

Journal of Public Economic Theory, 2001, vol. 3, issue 1, 15-25

Abstract: The paper presents a brief review of recent work that focuses on the normative economics of international trade. In a Heckscher-Ohlin-like economy, with skilled and unskilled workers, the available redistributive tools (that include income taxation) are not powerful enough to allow the separation of efficiency and equity issues, and "production efficiency" is no longer desirable. At a social optimum that calls for redistribution toward the unskilled workers, the social value of the unskilled intensive good is necessarily smaller than its production price. This finding allows us to unify existing results and suggests conjectures. Copyright 2001 by Blackwell Publishing Inc.

Date: 2001
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